British American Tobacco p.l.c.

Good morning, everyone. I'm delighted to welcome you to our 2026 Interim Results presentation. With me this morning is Javed Iqbal, Interim CFO, and Victoria Buxton, Group Head of Investor Relations. I will begin with our transformation highlights. Javed will then take you through our financial results in more detail. Finally, I will return to talk more about our performance outlook and why we are confident in the pathway ahead given the clear momentum we are building. We will then take your questions. With that, I would like to draw your attention to the disclaimers on slide two and three. Let's begin by looking at our transformation momentum. Starting with some highlights from H1. Smokeless now represents 19.8% of group revenue, up 160 basis points versus last year. We added 4.1 million smokeless consumers over the last 12 months, taking the total to 35 million. This progress is mainly driven by modern oil industry growth, where the strength of the Velo brand continues to resonate strongly with consumers. Our first half results were in line with expectations, supported by a strong multi-category delivery in the U.S., excellent Velo momentum across all three regions, and a resilient combustible performance in the U.S. and AME. Our discipline, focused on quality growth, continues to improve returns through more targeted investments, with new category contributions up 55% at constant rates. As previously guided, we expect adjusted profit from operations to accelerate in H2, driven by improvements in AME and APMEA. Our second half weighting will also benefit from the phasing of future wind savings. Finally, we continue to generate strong cash returns. We expect to be within our 2 to 2.5 times target leverage corridor by year-end, while continuing to reward our shareholders with our progressive dividend and £1.3 billion share buyback in 2026. I'm encouraged by the momentum we are building as we transform BAT. New categories are becoming an increasingly meaningful contributor to group performance, reinforcing our confidence in sustainable delivery moving forward. After a period of investment and transition, returning to our algorithm for the full year is an important milestone. It reflects the progress we have made in reshaping the business and provides a stronger foundation for long-term value creation. With that, I will hand over to Javed, who will take you through our financial performance in more detail.

Thank you, Tadeu, and good morning, everyone. I'm pleased to share that we delivered results in line with expectations on a constant currency basis. This performance was mainly driven by strong U.S. multi-category delivery and the acceleration in new category growth. Our reported results reflect some adjusting items, the majority of which are non-cash, including approximately £800 million primarily reflecting annual amortization of our US trademarks, a £370 million one-off adjustments related to Fit2Win, which around £230 million is non-cash, and £149 million credit following the settlement of historical litigation. To give you a clear view of our underlying performance, I will focus on constant currency, adjusted, and where relevant, adjusted for Canada metrics. You can find further detail on adjusting items and share data in the appendix. We continue to build momentum in the first half, reinforcing our confidence in delivering our full-year guidance. Group revenue increased by 2.9%, adjusted gross profit rose 3.8%, adjusted profit from our operations grew 3.5%, and adjusted diluted EPS was up 7.9%. Let's now turn to new categories. Revenue growth accelerated to 18%, driven by an other outstanding performance from Modern Oral, which was up 66%. Vapor revenue increased 5.3%, driven by the U.S., where we returned to double-digit volume and revenue growth. This was partially offset by a decline in heated products, with glow revenue down nearly 12%, impacted by inventory movements and competitive intensity in the value segment. We continue to deliver quality growth with gross profit up over £120 million and category contribution up 55% reaching £269 million. This reflects our disciplined approach to investment and increasing scale benefits. We remain committed to investing behind profitable growth in vapour and heated products. Specifically, where we are becoming increasingly selective where we deploy our resources, which Tadeu will talk more about later. Now turning to combustibles. Combustible volumes was down 4.7% with growth in Pakistan and Turkey more than offset by continued industry volume decline in other key markets and the impact of market exits in Cuba and Mozambique. Revenue grew 2.1%, driven by a robust price mix of 6.8%. Growth in the U.S. and AME more than offset a slower-than-expected recovery in apnea as fiscal and regulatory pressure persist. Adjusted gross profit and category contribution both grew ahead of revenue, driven by a strong performance in the U.S., positive price mix, and our continued focus on cost optimization. Combustible remains a powerful value engine for the group, delivering robust returns and continuing to fund our transformation. Our resilient performance reflects the breadth of our global footprint, the strength of our portfolio, and disciplined execution. Turning to our regions, starting with the U.S., we delivered a strong multi-category performance, driving total revenue up 8.5% and adjusted operating profit up 10.1%. New category revenue increased by nearly 60%, driven by continued success of VELO Plus, which grew more than 200%, and views which returned to double-digit volume and revenue growth. In combustibles, revenue grew 5%, driven by a robust price mix, including the benefits of excise duty drawback and positive trade inventory movements. Value share declined by 40 basis points and volume share was down 80 basis point, reflecting continued industry growth in deep discount segment and heightened competitive activity since Q4 last year. We have actively responded to this trend, investing behind our portfolio and further strengthening our commercial execution. As a result, we have held our volume share since January. Looking into the second half, we expect an acceleration of investment to support the launch of VeloMax and Vuze flavor pods, as well as behind our combustible portfolio in a highly dynamic market. Tadeu will talk about this in more detail later. In addition, we expect our strong H1 growth to moderate in H2, as positive inventory movements do not repeat and we lap a stronger comparator. In AME, Total revenue growth 0.9% with combustible up 2.5% and new category up 1.9%. This was partially offset by lower direct leaf sales, reflecting our continued focus on higher return, more profitable areas. Combustible Revenues was driven by strong delivery in Brazil, Turkey and Mexico and robust price mix. This was partially offset by our exit from Cuba and increased competitive pressures in Germany and Romania, where we have taken targeted actions to strengthen our portfolio. In new categories, modern oral revenue was up 22%, driven by the strength of our portfolio across both established oral markets in Scandinavia and newer growth markets including UK and Poland, which now account for around 50% of our modern oral revenue in the region. Heated product revenue declined by nearly 11%. Growth in Romania and Portugal was more than offset by lower revenue in Italy and Poland due to heightened competitive activity in the value segment. Looking ahead, we expect to strengthen our value proposition with the next generation Hyper Pro Plus in the second half of the year. We are also encouraged by the continued momentum of Glow Hilo, which is performing well in the premium segment. Vapor revenue declined 14%, mostly impacted by regulatory changes in Poland, as we continue to focus our investment on larger industry value pools. Adjusted operating profit increased 1.1%, supported by continued resilience in combustibles and quality growth in velo and views. This was partially offset by investments in heated product behind our innovations rollout. We expect performance to accelerate in H2, driven by our targeted commercial actions and the benefit of the rollout of new category innovations. Turning to apnea, where our recovery has been slower than expected. Revenue was down 6.3%, primarily driven by combustibles. While we continue to drive growth in key markets, including Pakistan and Indonesia, this was more than offset by the challenging regulatory environment and the impact of illicit volume in Bangladesh and Australia, alongside the timing of inventory movements in Vietnam, Modern Oral Revenue increased by 43%, driven by our first-mover advantage and category leadership across emerging growth markets. These include Japan, Pakistan, South Africa, and global travel retail, highlighting the increasing opportunity for the category and for Velo. Heated product revenue declined 13% impacted by material inventory movements and heightened competitive intensity in the value segment in Japan. Encouragingly, Glohelo continues to build momentum in the premium segment, and with HyperPro Plus launching in Japan in Q3, we expect an improving share performance in H2. Vapor revenue declined 28%, reflecting strategic market exits and more selective resource allocation. Adjusted profit declined 16.5%, mainly due to headwinds in key combustible markets. Looking ahead, we expect further sequential performance recovery in H2, supported by our commercial actions and investments in both combustibles and new category, and a softer comparator in Australia. Turning now to our group operating margin, which was up 30 basis point to 43.7%. We successfully offset inflationary pressures with a strong performance, higher profitability in new categories, and continued cost savings. At current rates, operating margin expanded by 10 basis point. We are making good progress with Fit2Win, our transformation program to build a leaner, faster, and more data-driven BAT. We have identified a further £100 million of optimization savings, resulting in an incremental one-off £100 million cash investment to support delivery. In addition to further drive new category growth, we have also completed a comprehensive review of our manufacturing assets and machinery. Through this, we have identified opportunities to upgrade to more efficient, next-generation technologies and state-of-the-art machinery to support future growth and productivity and to accelerate our transformation. As a result, we have recognized a non-cash charge of nearly £230 million in the first half. All together, we now expect £700 million of annualized savings by 2028, with £500 million to be delivered by 2027. Total one-off costs are now £950 million, with £840 million to be treated as adjusting. We continue to expect the majority of the costs to be incurred this year, with balance in 2027. Bringing it all together, earning per share increased by 7.9% as growth in operating profit was supported by 4.4% growth from earning kickers. This outperformance was primarily driven by lower net finance cost reflecting repayment of debt with proceeds from the partial disposal of ITC stake in May last year, and higher operating cash conversion in H1. Looking ahead to the full year, we now expect net finance cost to be around £1.65 billion with an underlying tax rate between 24% and 25%. As a result, we have upgraded our full year EPS guidance with earning kickers expected to be moderate as we annualize the benefit of lower debt levels. Strong cash generation continues to enhance our financial flexibility and support disciplined capital allocation. We remain on track to be within our 2 to 2.5 times leverage target range by year-end and to deliver more than £50 billion of free cash flow by 2030. We continue to focus on our capital allocation priorities which are investing in transformation, balance deleveraging with progressive dividend and sustainable share buybacks, and selective bolt-on M&A to support our transformation. To summarize, H1 was in line with expectations and we are on track to return to our mid-term algorithm for the full year, with profit second-half weighted. Key drivers for H2 include mid-teens new category revenue growth, led by velo and views, driving a further improvement in new category contribution, an acceleration in performance in AME, Further sequential recovery in APMIA and strong H1US growth moderating due to increased investment, lapping a stronger comparator and as positive inventory movements do not repeat. We expect H2 performance to be further supported by the positive phasing of fit-to-win benefits. As previously guided, we expect revenue and operating profit to be at the lower end of this range for the full year, absorbing around 1% transactional FX headwind and reflecting active investment choices, including the rollout of VeloMax and Vuze flavors in the U.S., Scaling Glow Hilo and Hyper Pro Plus launches, as well as increased combustible investment in the U.S. and other key markets. And finally, we now expect full-year EPS growth to be towards the middle of our 5% to 8% range. Thank you, and with that, I'll hand back to Tadeu.

Thank you, Javed. Looking ahead, I'm encouraged by the momentum we are building as we return to our algorithm and continue to transform BAT. We are entering the next phase of our journey from a position of strength, with accelerating financial delivery, increasing new category profitability, and a clear pathway to long-term growth and value creation. With that context, I want to share more detail on our progress, looking at the topics we get asked about most by you, our investors. Starting with the sustainability of our multi-category delivery in the U.S. Across the market, adult nicotine consumer behavior is changing in a significant way. BAT is fully aligned to where these consumers are heading with our unique multi-category portfolio of number one or number two share positions across all categories. As a result, we are now the fastest growing company in total nicotine. Our total nicotine volume share increased by 110 basis points year to date, fueled by new categories. with VILU driving around 90% share of modern oral value growth and VIUS delivering over 100% share of vapor value growth. My message here is clear. We believe we are the best position to win in total nicotine and continue to capture value in the world's largest nicotine value pool. I will now take you through the U.S. by category. Starting with combustibles, where we continue to balance disciplined investment with sustainable value creation. Industry volume continued to improve in the first half, declining 4.9% on a sales-to-retail basis. This was supported by moderating solar consumption decline trends, Slowing outflow to illicit vapor supported by regulatory enforcement actions and the expansion of deeper discount into track channels, which we expect the industry to lap in the second half. Our focus remains on driving value and share from our combustibles business, and we continue to deliver strong financial performance in H1, as Javed highlighted. Against this backdrop, we have seen heightened competitive activity from Q4 last year. We have already taken actions to further sharpen our portfolio management, strengthen our route to market, and leverage digital revenue growth management capabilities. In addition, we have been actively investing to strengthen our portfolio and we are starting to see encouraging results. Target investments have been supporting Newport in premium and we have also been strengthening Camel. Together, Lux Strike and Palmol Select continue to drive both volume and value share gains in branded value, which, combined with expanding our Doral brand coverage to five states, is strengthening our presence and competitiveness at the low end of the market. As a result, we have held our volume share since January, and we will continue to actively invest behind our portfolio in the second half. Second, I'm often asked about the regulatory enforcement landscape in the U.S. And I'm pleased that we are starting to see recent actions having an impact on irresponsible illicit operators, while also providing responsible legal manufacturers a pathway to bringing scientifically backed products to market. We are now seeing multiple government measures beginning to address the long-standing imbalance between the legal market and illicit operators. First, around half of vapor industry volume is now covered by state directory and enforcement frameworks. Second, more than 18 million unauthorized vapor products have been seized through Federal Costs Agency collaboration. Third, the FDA is taking actions to improve regulatory compliance for foreign manufacturers. And finally, Attorney Generals continue to increase pressure on illicit vapor sales channels and payment providers. Importantly, these actions have supported the legal vapor industry return to growth in H1. We are also encouraged by the FDA's new prioritization guidance, which supports a pathway for both vapor flavors and modern oral innovation. Taken together, these developments support a more level playing field. In U.S. Vapor, views continue to strengthen its leadership position. We extended value share to a record 55.9% in the first half and now hold more than double the share of our nearest competitor. Building on this leadership, we will begin a phased rollout of new audit-focused views flavors. broadening consumer choice and leveling the competitive playing field, starting in Q3 with distribution to approximately 25,000 outlets. We will execute this expansion in a disciplined manner, upholding our high standards of product quality, retailer compliance, and underage access prevention. Distribution will be carefully targeted as we work with retailers to secure their commitment to audit-only sales supporting category sustainability. Altogether, these give us confidence in VIEWS' ability to sustain growth and further strengthen its competitive advantage in the world's largest vapor market. Third, I'm often asked about the growth opportunity ahead in modern auto globally. In the U.S., I'm excited about expanding our Velo portfolio in the rapidly growing market. Velo Plus continues to deliver an outstanding performance with our overall modern auto volume share now 31% and value share nearly 26%. In addition, we are capturing around 90% of category value growth, demonstrating both the strength of the product and brand together with the effectiveness of our commercial execution. Building on this success, we are expanding the Velo portfolio to capture a broader range of audit consumer preference, including launching some limited editions Velo Plus variants. And starting Q3, we will launch VILLO Max, a higher moisture product and our latest innovation in the U.S. This will further expand our offer across two new strengths and four new flavors, complementing our existing portfolio and providing an incremental lever of growth. VILLO is the clear global number one brand in modern oil. The fastest-growing category with the lowest risk profile. We continue to expand Velo's footprint as regulatory clarity improves, with 32 markets having now adopted category regulation, more than double the number versus 2024. Our clear leadership position continues to strengthen. underpinning by strong growth across all three regions and the successful execution of our premiumization and innovation strategy. Our scale advantage continues to widen. In the first half, BAT shipped 7.9 billion pouches. And across our top markets, our modern oil volume share increased by over 8 percentage points to reach 39%. As the category continues to grow at pace, we believe our superior portfolio supported by continuous innovation, scale, brand strength, and regulatory capabilities will become increasingly important competitive advantages. In AME, BAT is clear category leader with 62% volume share across top markets, making us nearly seven times larger than our nearest competitor. This leadership position is underpinned by our superior brand equity scores, 40% higher than our closest competitors in Europe, supporting our premium brand positioning and reflected in our 68.5% value share. We continue to drive strong volume-led revenue growth, and importantly, this growth is becoming increasingly broad-based. Around 50% of our revenue comes from outside the Nordics, where the category continues to develop with growing incidence and consumption, supported by expanded distribution, growing category adoption, and the strength of the Velo brand. Innovation remains a key differentiator. Through VeloShift, we are extending our premium positioning. Progress in Sweden and Switzerland is encouraging, with Shift capturing 1% of value share in Sweden and 1.5% in Switzerland within a few months of launch. Altogether, our strong momentum gives us confidence in our ability to continue driving sustainable profitable growth and value creation in modern oil. Fourth, I'm asking about our key drivers of performance improvement in heated products. We are resetting gloss performance with a sharper, more disciplined approach. Industry volume growth moderated further in the first half, reflecting excise-driven disruption in Japan and continued consumer poly-usage across vapor and increasingly modern oil globally. At the same time, competitive intensity has stepped up. Against this backdrop, we are focusing our investments where we see the strongest consumer opportunity and the best return potential, in what remains a significant £9 billion value pool. We are scaling Glorhilo to build premium growth and strengthening our value proposition with HyperPro+. In addition, we are concentrating resources behind priority markets in a more selective way. Through this, our focus is clear. We set our performance and we build share momentum in H2 through innovation-led growth and disciplined execution. Glorhilo is beginning to demonstrate the benefits of our premiumization strategy. Launched across nine target markets, covering around 70% of industry volume, this provides a strong platform for future scale, with around half of consumers new to the Glow platform. In addition, we are strengthening Glow's brand equity as we establish our presence in the premium segment. This is translating into tangible commercial progress, with volume share increasing across key markets and particularly strong momentum in Poland. We continue to focus on scaling Glorhilo through generating trial, targeting consumers of premium combustibles and heated products, while building awareness to unlock further growth. And finally, bringing it all together. As we build on our momentum, we see a clear pathway to improved growth in 2027. Our delivery will be supported by four key drivers. First, continued strong new category revenue growth led by continued momentum in modern oil, U.S.-led vapor delivery, and a more targeted approach in heated products. Second, consistent combustible delivery supported by further recovery in APMEA and targeted investment to sustainably drive combustible's value and share globally. Third, continuous strong profit conversion, reflecting improving new category returns and ongoing cost savings. And fourth, EPS accretion from share buybacks, lower finance costs, and continuous strong cash generation. To conclude, by focusing investment on our highest return opportunities, we are delivering quality growth through our multi-category portfolio, supported by sharper execution, enhanced capabilities, and disciplined resource allocation. Through this, we are driving higher returns and building a more resilient business. At the same time, we are enhancing financial flexibility, enabling continued investment in our transformation, together with delivering strong cash returns. And I'm confident in our strategy, our execution, and that BAT is well positioned to deliver long-term value for our shareholders. Before we move to Q&A, let me leave you with some of the key teams shaping BAT's next phase of growth and value creation. We look forward to sharing more at our Capital Markets Day in September. Thank you for listening. And I will now hand over to Victoria to introduce the Questions and Answers session.